Re: Per Diem and Demurrage

Malcolm Laughlin <mlaughlinnyc@...>

Posted by: "tgregmrtn@..." > One comes into play (demurrage) as a penalty to the receiver for keeping a car too long.

It applied equally to the shipper.

> Per Diem is a method of car accounting to help recoup the cost of the car. Both are functions of car accounting department for car utilization.

Demurrage was not part of car accounting. It was part of the station accounting process. Demurrage bills were cut by the same clerks in the agencies who handled revenue billing.

None of this had much to do with what we called "car utilization" in that era. That was the management process of finding ways to get better turnaround on the cars. The only relationship between that and accounting was that net per diem was part of the scorecard for car utilization.

I should mantion that my knowledge of this comes from having been associated with car management at various times between 1960 and 1967 and having worked with accounting functions both as a railroad employee and as a consultant.

. If you have plenty of business on your own railroad why would you want to turn your cars over to a long haul cross country move, when your share of the revenue stops at?your last junction?
In most cases the shippers loaded to many destinations on and off line, and the railroad had little control. They weren't going to tell a shipper that sentout several cars a day that he had to have his shipments to the west, for example, in western mark cars and so on. In theory the railroads could have cars loaded towards their home roads, but in practice they had little control.

In selecting cars to load, there was a big conflict of interest between what was good for an individual railroad and what was good for the system. If you loaded your own cars and sent foreigns home empty, you reduced your own net per diem. But to minimize railroad system empty car miles and days, it was much better to load foreigns in the direction that they were going to move empty. One of the projects in the AAR/FRA car management program in the 70's was working towards getting railroads to load the cars in a manner that reduced total system empty mileage.

> you can't tell me that the clerks?or aganets couldn't get permission to load empty cars home... Regardless of the rules applicators made those calls...

On most railroads they didn't have to get specific permission to laod any general service car. They might get bawled out for making the wrong call too often, but that wasn't easy to detect. What they would be zapped for was not spotting an available car for loading and losing the load.

Malcolm Laughlin, Editor 617-489-4383
New England Rail Shipper Directories
19 Holden Road, Belmont, MA 02478

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